Compound Grants Program - Lessons and Next Steps

We started the Compound Grants Program with a simple idea in mind: let’s fund contributors that are working to make Compound better. Since we weren’t sure how many contributors there would be and how much money we would need to pay them to work on the protocol, we thought it best to start small.

Accordingly, the first iteration of Compound Grants Program (“CGP 1.0”) was funded with a little over $2M in COMP. After six months of operations, this program funded over 30 grantees with over $1M in funding. The CGP funded open-source dashboards, analytics, hackathons, and so much more. You can see a list of everything the CGP funded at this link.

From the start, CGP 1.0 was an experiment to see what a grants program managed by independent community members could look like. We learned a lot from running the experiment, and we’d like to share some of the key learnings below.

What Worked

  • Reasonable, but generous grant sizes. For most projects (Compound included), the bottleneck is not capital but contributors. That is, there is an abundant supply of capital but very few contributors that are willing (and able) to step up to the plate to do the work. Motivating contributors requires paying competitive salaries and grants.To that end, we have been generous (but reasonable) with grants, which has allowed us to attract incredibly talented contributors to work on improving Compound.

  • Attach milestones to grants. Milestones serve two purposes: they protect us from giving an upfront grant to someone who doesn’t end up doing the work and they encourage the grantee to continue delivering since that’s the only way to receive the full grant. Milestones have worked exceptionally well for us, and we’ll continue using them going forward.

  • Bet on doers. When we started Compound Grants we weren’t sure who would be able to do the work and who wouldn’t. It turns out that there’s a very easy way to tell who can deliver: people who have already done good work are likely to do it again. Our most successful grants went to “repeat contributors” — they’ve done it before and they’ll do it again.

What Didn’t Work

  • Launch and “they will come.” When we launched Compound Grants, we thought people would know what to work on. In retrospect, we should have known that it’s easy to boil the ocean when thinking about what to work on. What happened is applicants would apply for grants for all sorts of projects, putting us in the position of assigning priorities to applications after they were submitted. Instead, the right approach is for grants programs to understand the level of priorities for the protocol and put out RFP’s that community members can begin working on. We didn’t do that at first, but we learned quickly. Now, we have a list of RFP’s that are a priority for the protocol to complete and encourage community members to work on them.

  • 2-week turnaround. Prior to launching Compound Grants, we did some research on how other crypto grants programs work. Across the board, the biggest “pain point” we heard was how slow grants programs operate: it would take months for applicants to hear back from the program, and by that point, they would not need money or they pivoted to working on something else. To solve this pain point, we decided to operate Compound Grants with a tight turnaround time: 2 weeks from application to grant. While we did a good job of being speedy, we didn’t hit our 2-week goal. There were several reason for that, with the biggest ones being (i) if you’re running grants in batches, the critical path is determined by the slowest applicants (which can take several weeks to process), (ii) larger grants can take significant up-front work to review and process, and (iii) yours truly is leading the grants program solo and part-time, which limits bandwidth for processing applications. What should we do to improve turn-around time? First, we should be more stringent with applicants: if applicants don’t submit the required information by a certain date, they forfeit the ability to receive a grant. Second, as the grant program matures from an experiment to something more sturdy, we recommend staffing the program with several full-time employees who can process grants in parallel. We’re not quite there yet, but this is something we’d like to actively work towards.

What Now?

Now that CGP 1.0 has concluded, we will put a pause on new grants. Over the next few weeks, we will finalize payouts to existing grantees and wrap up operations of the program. To provide us with adequate funding for essential expenses, we recommend keeping $250k worth of COMP in the existing CGP multisig. All unused COMP will be returned from the multisig back to the treasury. (To be more precise, we spent ~2.5k of the 5k COMP the program received in funding; we recommend keeping ~700 COMP in the multisig as a reserve and sending the balance back to the treasury).

CGP 1.0 was an enormously successful experiment. We believe it’s now time to double-down on grants and make the program better, faster, and bigger than ever before. Over the next few months, we will be designing CGP 2.0. Our hope for CGP 2.0 is to build the best community-led organization, ever. That means staffing CGP with a full-time team, developing a clear communications process so the community knows what’s being worked on and what needs to be worked on, and constructing incentives for contributors to work on Compound exclusively. We need all the help we can get; if you’re interested in getting involved, please comment here and/or reach out on Discord.

Developing CGP 2.0 will take time, which is why we are pausing grants while we design the next iteration of the program. We can’t wait to share CGP 2.0 with you. Stay tuned!


Just wanted to give a huge shoutout to @sukernik and the rest of the CGP 1.0 Team; the depth and experience on the team paired with their vision for what the Compound Protocol will look like is incredible, and we’re especially excited to see what CGP 2.0 is able to accomplish! Would love to help out in any way we can, and I’m strongly in support of expanding the scope and size of CGP 2.0 given more direction and focus on how to incentivize clearly defined projects to apply to CGP and better the ecosystem


I think the next iteration of Grants should scale up and decentralize as much as possible. We need to target having a real DAO workforce & partnerships.

Some ideas:
Many-to-Many projects: In a DAO most people are not one-to-one on projects. Some of the most productive coders like Arroo and Tyler knock out multiple projects in one go and collaborate as needed. There needs to be a way to pay and track for multiple projects with multiple workers.

Streaming payments via Sablier - Related to the above, this will simplify and automate payments for complex projects. Streams can be opened and filled up by milestone, and if necessary stopped to claw back remaining grants.

Professional grant and project management - grant workers should also have project management experience and be able to connect talent to existing projects. They should drive accountability for milestones and keep clear lines of communication open to the DAO.

Working document on DAO best practices - Learn from Sushi, Aave, Yfi, and other protocols and publish the results in a living document so that everyone knows the rules

Larry has done an amazing job taking grants to the million dollar idea factory it’s become. It’s been an honor to work with him and with Grants. Let’s drive the work forward and further cement its role in the community!


These are some excellent insights @sukernik ! We’re working on our own grants program at Fei and experience a lot of the same things. Echoing @ratankaliani thanks for helping trailblaze and publicly document the learnings


Starting a new initiative is always challenging but you did an amazing job with the Grants!

It’s great to see a list of priorities. Submitting a proposal without them is like shooting in the dark, especially when contributors has several ideas. It’s hard to narrow them down and then they end up not submitting anything or concentrating on the wrong thing.
Are they listed in any particular order? E.g. is #1 more urgent/desired than #20?


The RFP’s aren’t stack-ranked by priority. That’s something we have yet to do!


Thank you very much for the operation of CGP! I didn’t apply this time, but in CGP2.0, I would like to make a proposal to improve the compound. Thank you again for your efforts!


Is there one place to see the project status of the grants that were funded?

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Right here.

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Do you mean the “links” column of each funded grant? I guess it wasn’t clear that is a link to the completed project or just a link for reference. btw it would be nice if that table could be full width so you don’t have to scroll to get to the other columns on larger monitors.

Given the success of CGP1.0 with @sukernik at the helm, I think the community has understandably wanted to be generous in allowing ample time to develop and propose CGP2.0 as outlined in this forum thread.

Since we haven’t heard any updates in the intervening five months, I think it is reasonable for the community to ask for a check-in. Is a proposal for CGP2.0 forthcoming in Q1 2022?

If a concept for the core structure is ready but certain details need attention, please do let the community know how we might help fill in the gaps! If bandwidth limitations are too much of a barrier, I would encourage us to consider other proposals for a CGP2.0 based on the lessons learned in Larry’s OP.


I’m very glad you resurfaced this post @allthecolors. I’ve been meaning to reply for a bit, but things kept coming up.

Here’s the full update. After CGP 1.0 ran its course, we started working on CGP 2.0 right away. The basic idea was to take the parts of CGP 1.0 that worked and do them 10x better. As we were coming up with the detailed plan, however, it became clear that CGP 2.0 couldn’t just be one person. To operate well, it had to be a group of people working full-time on the initiative.

Since we knew we needed a group of people, we started recruiting potential employees for CGP 2.0. While we had some great candidates, it proved challenging to get people to commit to a job before CGP 2.0 was fully funded by the treasury. As a result, we started thinking about creating a proposal to fund CGP 2.0 before the team was identified. Before we posted anything on the forums, we wanted to make sure the plan was sound legally too. We had our lawyers review the plan and give us advice on how to run with it.

Unfortunately, this is where there were some hiccups. To launch CGP 2.0 effectively, our lawyers strongly suggested a legal entity of some type would need to be created to hold the funds. There are many workable entity types grants programs can use, but for programs of a significant size ($5M+), entities in tax-friendly jurisdictions were highly encouraged. Armed with all of this information, we realized that setting up the entities, recruiting the CGP 2.0 team, and managing the operations for CGP 2.0 would be a very expensive task, both financially and time-wise. And candidly, I myself did not have the time to do it.

I strongly believe that Compound needs something like CGP 2.0. If there are any community members that are interested in picking up the mantle, now’s the time to speak up!


I have the same question. This would make things easier for everyone

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I’m willing to do it.


Hi, I would also be willing to help out the community in this process


This is wonderful! Appreciate the approach to minimize the turn-around time and also bring more clarity to the applicants.

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I think this is an important initiative and would be happy to contribute as well. I wonder if we are over-thinking things with the entity setup. It might be fun to think about the simplest possible grants program that allows governance to directly vote (on or off chain) on grants.


My sense is having any sort of tokenholder vote for grants is overkill. Many grants, for example, are $5-$25k. Having tokenholders vote on such small grants is a burden for both the applicant (they need to wait for the vote to pass) and the voter (they need to spend time reading the applications).


participation = low
price = also low
risk = very low

Let’s incentivize working code with a perpetual hackathon for 6 months.
Bravo gives 3k COMP to Micro DAO.
Micro DAO ( simple majority comp voting ) awards 1k COMP to best bi monthly proposal.

Let’s make it easy


I think it would be best to outsource this sort of work to stakeholders and beyond. Experiment with funding 2nd/3rd party grants coordinators with small amounts of COMP. If these parties do well, continually fund them with increasing amounts of COMP.

To get something like this started, it’s key for token holders to vote on an outline of items with priorities and values attached to each item. I can and will contribute to such an outline if someone wants to take the lead on this, or I can take the lead if I’m provided with enough incentives.

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